Case Study 1
KFC (Kentucky Fried Chicken) is a global brand fast-food chains which expands rapidly and achieves an impressive success in Chinese market during last decades. More than 40 precent of Yum’s operating profit is generated by KFC China with over 4,500 stores. (Junheng 2012) However, KFC China is facing a serious of challenges about perceived negatives of fast food, the changing nature of Chinese consumer and the rising competitions. It needs to localise their offerings and keep sustainable competitive advantages to suit the fast pace of China’s economy growth. And the strategy of more company-owned outlets should be used to boost expansion and maximise profits in the long term development in China. Analysis
First of all, one of the most important strategies of KFC’s huge success in China is departmentalised by region. However, the regional divisions should have more control powers in every aspect of the business operations, for example, regional marketing and new products innovation. (McKinsey 2012) The differences in spending power of regions will be wider; therefore the pricing and menus could be slightly different to fit the local market economies. Furthermore, KFC China has to suit their locals by localising their offers. As regional flavours are strongly different, especially the levels of spiciness are various; the regional outlets should offer diverse foods to cater local tastes. (Harvard 2011) Secondly, KFC should continue the strategy of company-owned outlets rather than franchising in China. KFC China has enough finance to support their expansion and has its own entire supply chain. According to the Harvard Business Review, KFC has ‘the most advanced and integrated cold-chain in China’. (Harvard 2011) As well as company-owned outlets are much easier for the business to control their operations, from the products safety to the customer services. And a larger amount of profits will be generated. Currently, KFC China...
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